The thymus plays a central role in the establishment of self-tolerance. Although broad heterogeneity is observed in thymic epithelial cells, heterotopic transplantation of purified MTS24+MHCII+CD45-TECs derived from E15.5 embryo showed that cells of this phenotype are sufficient to form a phenotypically and functionally normal thymic microenvironment that initiate and sustain regular thymopoiesis. This indicates that MTS24+ thymic epithelia cells encompass a population of intrathymic stem cells capable of giving rise to fully functional cortical and medullary thymic epithelium. This information suggests that grafting of MTS24+ thymic epithelial stem cells possesses therapeutic potentials to induce immune tolerance in autoreactive T cells and allogenic T cells. CD4+CD25+ Foxp3+regulatory T cells (Tregs) have been suggested to play a critical role in the suppression and prevention of autoimmune diseases including multiple sclerosis, rheumatoid arthritis and type 1 diabetes. CD4+CD25+Foxp3+ Tregs develop when their cognate antigens are expressed in the thymic epithelial cells. Importantly, activated proteolipid protein-specific CD4+CD25+ regulatory T cells suppress the development of EAE induced by other myelin antigens such as myelin oligodendrocyte glycoprotein and myelin basic protein. Diabetes-associated antigen-specific regulatory T cells also suppress the development of diabetes more efficiently than polyclonal CD4+CD25+ regulatory T cells. This evidence suggests that CD4+CD25+ Foxp3+Tregs reacting with autoimmune disease-associated autoantigens could exhibit efficient suppression in autoimmune diseases via bystander suppression. We will develop a novel strategy to develop autoimmune disease-associated autoantigen-specific CD4+CD25+ Foxp3+Tregs by using thymic epithelial stem cells. We hypothesize that grafting of thymic epithelial stem cells expressing the MBP transgene followed by transplantation of syngeneic bone marrow-derived hematopoieticstem cells could facilitate the development of MBP-specific CD4+CD25+ Foxp3+Tregs with higher suppressive activity in the reconstituted immune system and render Experimental Autoimmune Encephalomyelitis (EAE) -susceptible mice resistant to EAE. To address this hypothesis, we propose to generate Tg mice that express MBP gene in the thymic epithelial cells. We will investigate development of MBP-specific Foxp3+ Tregs in the MBP-Tg mice. Myelin basic protein (MBP) is an autoantigen involved in development of experimental autoimmune encephalomyelitis (EAE). We will generate the mice expressing the MBP and examine whether expression of MBP gene in the thymic epithelial cells can suppress the development of EAE.